Chancellor George Osborne describes a move by RBS to exit a state-backed insurance scheme as a “step” towards returning the bank to the private sector.
The asset protection scheme (APS), from which RBS never made a claim, provided insurance against losses from the bank’s most toxic assets.
It played an important role in stabilising market perceptions of RBS after the impact of the financial crisis became clearer and the bank’s share price fell to a low of 10p in February 2009.
RBS will save £1.4m a day when it exits the APS on Thursday, having paid £2.5bn since signing up in February 2009.
We all want a system in which banks will never again need to seek credit support from government in a financial crisis. Stephen Hester
The chancellor said: “The government’s strategy remains to return RBS to the private sector when it is value for the taxpayer to do so. Today is a step in that direction.”
The government agreed to insure £282bn of assets when RBS formally entered the APS and those assets have since fallen to around £105bn, a reduction of 63 per cent.
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RBS Chief Executive Stephen Hester, said: “We all want a system in which banks will never again need to seek credit support from government in a financial crisis.
“Huge progress has been made towards that goal and our exiting the APS is a significant milestone in RBS’s recovery.
“The APS has played a valuable role, buying time for the bank as we implemented change from the worrying days of 2009 to create the much stronger institution it is today.”
He added: “The changes RBS needed to make after 2008 were truly radical. Much progress has been made along that road. There is much work still under way. But RBS and all who rely on us are better off for the strong progress already made.”
Earlier this year, RBS also repaid £163bn in emergency loans including £36.6bn in emergency liquidity assistance from the Bank of England, and some £52bn from the US Federal Reserve, as well as £75bn from the credit guarantee scheme.
But the bank, along with others across Europe, is still receiving some central bank support via the 10bn euro of cheap three-year loans from the European Central Bank’s long-term refinancing operation.
The lender faces a number of hurdles ahead, including an expected penalty for Libor-fixing, which is being investigated at RBS after Barclays was fined by regulators earlier this year.